Wolterk/iStock Editorial via Getty Images
Managed care bellwether, UnitedHealth Group (NYSE:UNH) beat Street forecasts for Q4 2022 financials on Friday, posting better than expected medical costs despite concerns over the impact of respiratory viruses, COVID-19, RSV, and flu.
Compared to ~82.9% in the consensus, UnitedHealth (UNH) recorded a medical care ratio of ~82.8% for the quarter, indicating the extent of premiums paid out for medical care during the quarter, a closely followed industry metric.
Chief Executive Andrew Witty brushed aside “tripledemic” concerns during the company’s earnings call.
“There was a bit more flu and respiratory. But really, I’d say immaterial in the scheme — in the grand — in the way I’d say in the grand scheme of the healthcare costs of the U.S., almost not noticeable. I mean, almost nothing to see,” he said.
Brian Thompson, CEO of UnitedHealth’s (UNH) insurance arm, agreed, noting that the medical utilization related to flu has been on a downward trend for five consecutive weeks. It was “really not a meaningful impact as I’m looking forward versus what we’ve planned for,” he said.
“And the little elevation we saw was somewhat within the ranges of what you typically would expect in a normal Q4 early flu season,” Witty added.
On financials, RBC Capital Markets analyst Ben Hendrix with an Outperform rating on UnitedHealth (UNH), opined that the quarter was solid. However, he added that he expected a potential impact from flu and RSV activity on the company’s medical loss ratio.
However, following the earnings results, CFRA downgraded the stock to Buy from Strong Buy and lowered its price target to $595 from $650 per share. The analyst Paige Meyer noted her doubts over further upside given UnitedHealth’s (UNH) premium valuation after a strong run in 2022.
“Our revised opinion reflects our view of a strong earnings growth outlook, though with slightly less upside remaining given the premium valuation and outperformance in CY 2022,” Meyer wrote.
Read: Seeking Alpha contributor Geoff Considine reasons why UnitedHealth (UNH) is off to a weak start in 2023 and reiterated his Buy rating on the stock.
